State oil companies' capex jumps 22 per cent in FY18

NEW DELHI: State oil companies spent a record Rs 129,000 crore in 2017-18 on acquisitions as well as expanding oil production, refining and distribution facilities. Capex was 22% more than the previous year.

In the last few years, state oil firms have been spending at a rapid pace on drilling wells, laying pipelines, upgrading refineries, expanding cooking gas bottling facilities and marketing infrastructure to meet the growing domestic oil demand. They plan to spend Rs 88,000 crore in the current fiscal year.

India’s oil demand expanded 5.3% in 2017-18, after rising 5.4% in 2016-17 and 11.6% in 2015-16. Growth in production of refined products lagged demand expansion in all three years.

This has meant lower surplus available for export, and increased need to invest in expanding production and distribution infrastructure.
The government’s focus on pushing up natural gas consumption has also prompted bigger investments in pipelines and liquefied natural gas import terminals.

The capex has expanded sharply in the last two financial years due to major acquisitions by state oil firms. ONGC spent about Rs 45,000 crore in acquiring the government stake in Hindustan Petroleum Corp and a gas field from Gujarat State Petroleum Corp in 2017-18.

India’s oil production has, however, crawled for several years, necessitating big investments by ONGC and Oil India in exploration and production. ONGC drilled 503 wells at a cost of about Rs 14,000 crore in 2017-18. It has now set a target of spending Rs 17,600 crore on drilling a record 535 wells in 2018-19.

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